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Mortgage

The Guide for Single Women Homebuyers

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

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Single women are almost twice as likely as single men to be homeowners in most U.S. metropolitan areas, according to a recent LendingTree study. On average, single women own about 22% of homes, compared with the 13% owned by single men.

Even in the metro area where the ownership rate among single men is the highest in the country — Oklahoma City, at 16% — homeownership among single women there exceeds that rate by 8 percentage points, according to the study. LendingTree is the parent company of MagnifyMoney.

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If you’re a single female who is considering taking the homeownership plunge, these statistics prove you’re in good company. Read on for tips on how to navigate making the biggest purchase of your life.

Pros and cons of purchasing a home on your own

As with any significant decision, both positives and negatives come with buying a home by yourself. Having a clear picture of each will ensure that you enter the homebuying process with a realistic idea of what’s ahead.

Pros

  • Autonomy. Owning a home spells independence! No more depending on a landlord or anyone else for your living arrangements. You’ll also get to navigate the buying process without having to compromise or yield to someone else’s preferences.
  • Building wealth. As you pay down your loan and build up equity in the home, you’ll be increasing your wealth.
  • Stability. You’ll never have to worry about your rent increasing unexpectedly or having to find a new place once a lease ends.

Cons

  • Vulnerability if you lose your income. You alone will be responsible for paying the mortgage. If you lose your income, there’s no co-borrower to pick up the slack. To protect yourself if that does happen, build up a healthy emergency fund of three to six months or more of expenses before buying a home.
  • Difficult to qualify for a bigger mortgage with just one income. Tendayi Kapfidze, chief economist for LendingTree and the author of the U.S. homeowning gender-gap study, said this is one of the biggest disadvantages. “You’ll probably afford less when you’re by yourself than if you were combining incomes,” he stated.
  • Less flexibility. Making impulsive decisions that affect you financially may no longer be an option once you become a homeowner.
  • Longer to save. Coming up with a down payment is a challenge for most buyers, regardless of marital status or gender. If you’re aiming for a 20% down payment, it takes over seven years on average to save it, according to Zillow. Naturally, saving on your own means saving at a slower pace.
  • Solely responsible for everything. The independence you get from buying a home comes with a downside: Everything is on you. From maintenance and repairs to taking care of the lawn, you’re either doing it on your own, getting help or paying someone.

Protecting your real estate investment as a single homeowner

One thing to keep in mind when purchasing a home on your own is how to protect your investment should your single status change in the future.

If you let a partner move in with you or you get married, you’ll need to decide how to approach ownership of the home. If your partner or spouse is to become a co-owner, then you’ll need to add them to the deed.

“Get the advice of an attorney on how to best protect your assets,” Kapfidze recommended. Depending on your other assets and the value of the home, a prenuptial legal agreement may be in order. In some cases, you may want to have a formal written agreement on how you will divide the mortgage payments and whether your partner will pay you for any equity already built up in the home.

Loan programs available

The best way to maximize your buying power as a single-income borrower is to make sure you finance it with the most cost-effective loan. This will affect the size of the mortgage you’re approved for, your monthly bills and cash flow and, ultimately, the total amount you’ll pay to finance the home.

There are multiple loan options available, depending on your situation

Conventional loans

Conventional loans are mortgages that are not a part of a government program. They are usually the way to go if you can put at least 5% down and you have solid credit, as the better your credit score, the lower your interest rate. (Some lenders may have products that allow a 3% down payment.)

Keep in mind that if your down payment is less than 20% of the purchase price, you’ll need to pay for private mortgage insurance (PMI), which can chip away at your buying power.

FHA loans

With a loan from the Federal Housing Administration (FHA), you can put down as little as 3.5%, a great option if saving for a large down payment will take you a while. And the minimum credit-score requirement of 500 gives borrowers with less-than-perfect credit a shot at homeownership. (If you wish to put down 3.5%, you will need a credit score of at least 580.)

These loans do require that you pay an annual mortgage insurance premium (MIP), which is built into the monthly payment, as well as an upfront mortgage insurance fee.

VA loans

If you qualify for a loan from the U.S. Department of Veterans Affairs (VA), you can purchase a home with no down payment and flexible credit requirements. Qualifying borrowers must be Active Duty service members, veterans and eligible surviving spouses.

USDA loans

The U.S.Department of Agriculture (USDA) offers loans to very low– to moderate-income borrowers who purchase homes in designated rural areas. These loans require no down payment, allow you to finance the closing costs and have forgiving credit requirements.

HomeReady®

With a minimum credit score of 620 and a down payment of at least 3%, you can qualify for this program offered by Fannie Mae.

Home Possible®

No credit score is required for this Freddie Mac program, but you’ll need to meet the income restrictions for very low– to moderate-income buyers and put down at least 3%.

Steps to becoming a homeowner

Take the intimidation factor out of buying a home on your own by approaching the process in an organized fashion. Here are some steps to take toward becoming a homeowner.

Figure out your budget. Before you start shopping for a home or looking at loans, take a look at your budget to see what size monthly payment you can afford. Figure out an “all-in” amount you can spend on housing, including the mortgage payment, taxes, insurance, maintenance, utilities and other related expenses.

Kapfidze said it’s crucial to be realistic when estimating what you can afford. “Be wary about overextending yourself when you’re single because if you do have a disruption in your income, you’ll be in a challenging situation,” he said.

Educate yourself. You may want to consider taking a homeownership course through your local HUD office or a non-profit organization in your area.

Research loan options and lenders. In addition to the mortgages listed here, check with your local HUD office to see if your state offers loan programs you may qualify for. Compare loans and lenders to find the best terms that meet your needs.

Get prequalified. You can get an idea of how much your lender will approve you for by submitting your information for a prequalification. Keep in mind that it’s just an estimate and not based on your full application.

Get pre-approved. A pre-approval will hold more weight than a prequalification while you’re shopping because it’s based on an official application. You’ll have an advantage over buyers who are shopping without one.

To increase your chances of approval, Kapfidze suggested consumers pay attention to the factors lenders will focus on the most. “Lenders care about your income, your down payment [and] your credit score. That applies to all buyers,” he said.

Start shopping. Work with a real estate professional to help you during your home search. But be prepared to stick to your guns regarding your price range, and don’t feel pressured to go over your budget.

Making an offer. Once you’ve settled on a home, your real estate agent will help you make an offer. But don’t get too attached to a property. Once you develop an emotional attachment to a house, it can be hard to look at your situation objectively and know when you need to walk away.

Closing on the home. Once your offer is accepted, you’ll go through a home inspection, work with the sellers on necessary repairs and any other steps your lender will require before closing. And then you’ll finally reach the moment you’ve been working for … you’ll be a homeowner!

Buying with confidence

Purchasing a home is a big responsibility for anyone. Single women who are considering buying a home should not be discouraged or intimidated. “There are more and more single buyers out there. A lot of people are making that move,” Kapfidze said.

If you do your research and have a firm grasp of the process, you’ll be able to approach buying and owning a home with confidence.

This article contains links to LendingTree, our parent company.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

By clicking “See Rates”, you will be directed to LendingTree. Based on your creditworthiness, you may be matched with up to five different lenders in our partner network.

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Mortgage

How to Recover From Missed Mortgage Payments

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

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understanding good faith estimate vs loan estimate
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Can you bounce back from a missed mortgage payment or two? The answer is yes, but there’s work involved. After all, your payment history has the greatest impact in determining your credit score.

Falling behind on your mortgage payments can affect your credit and finances, and you could lose your home to foreclosure. It’s critical to be proactive and not wait until it’s too late to get help.

How missed mortgage payments affect your credit

In most cases, mortgage lenders give you a 15-day grace period before charging a fee — often around 5% of the principal and interest portion of your monthly payment — for late payments. But your credit history typically isn’t impacted until you’re at least 30 days behind on a mortgage payment. At this point, your mortgage servicer may report your late mortgage payment to the three major credit reporting bureaus: Equifax, Experian and TransUnion.

Your credit score could drop by 60 to 110 points after a late mortgage payment, depending on where your score started, according to FICO research. Being 90 days late on your loan could lower your score by another 20 points or more.

It can take up to three years to fully recover from a credit score drop after being a month behind on your mortgage, FICO’s research found. Once you’re three months behind on your mortgage, that time can increase to seven years.

Recovering from missed mortgage payments

Falling behind on your mortgage can be a frustrating and scary experience, particularly if you’re facing the threat of foreclosure. Here are some options to help you get back on track after missed mortgage payments:

  • Repayment plan. Your loan servicer agrees to let you spread out your late mortgage payments over the next several months to bring your loan current. When your upcoming payments are due, you’d also pay a portion of the past-due amount until you catch up.
  • Forbearance. Your servicer temporarily reduces or suspends your monthly mortgage payments for a set amount of time. Once the mortgage forbearance period ends, you’ll repay what’s owed by one of three ways: in a lump sum, a repayment plan or by modifying your loan.
  • Modification. A loan modification changes your loan’s original terms by extending your repayment term, lowering your mortgage interest rate or switching you from an adjustable-rate to a fixed-rate mortgage. The goal is to reduce your monthly payment to a more affordable amount.

Be proactive about getting back on track and reaching out to your lender for help instead of waiting until you get late payment notices. If you think you’ll be behind soon or are already a few days behind, make contact now and review your options.

Extra help for homeowners affected by COVID-19

If you’re behind on mortgage payments because of a financial hardship due to the coronavirus pandemic, you may qualify for a mortgage relief program through the Coronavirus Aid, Relief and Economic Security (CARES) Act.

Homeowners who have federally backed mortgages, and conventional loans owned by Fannie Mae or Freddie Mac, can request mortgage forbearance for up to 180 days. They can also request an extension for up to an additional 180 days.

Federally backed mortgages include loans insured by the:

  • Federal Housing Administration (FHA)
  • U.S. Department of Agriculture (USDA)
  • U.S. Department of Veterans Affairs (VA)

Reach out to your mortgage servicer to request forbearance. Even if your loan isn’t backed by a federal government entity, Fannie Mae or Freddie Mac, your servicer may offer payment relief options. You can find your servicer’s contact information on your most recent mortgage statement.

How many mortgage payments can you miss before foreclosure?

Your lender can begin the foreclosure process as soon as you’re two months behind on your mortgage, though it typically won’t start until you’re at least 120 days late, according to the Consumer Financial Protection Bureau. Still, it’s best to check your local foreclosure laws since they vary by state.

Here’s a timeline of how missed mortgage payments can lead to foreclosure.

30 days late

Your lender or servicer reports a late mortgage payment to the credit bureaus once you’re 30 days behind. Your servicer will also directly contact you no later than 36 days after you’re behind to discuss getting current.

45 days late

You’ll receive a notice of default that gives you a deadline — which must be at least 30 days after the notice date — to pay the past-due amount. If you miss that deadline, your servicer can demand that you repay your outstanding mortgage balance, plus interest, in full.

Your mortgage servicer will also assign a team member to work with you on foreclosure prevention options. This information will be communicated to you in writing.

60 days late

Once you’re 60 days late, expect more mortgage late fees, as you’ve missed two payments. Your servicer will send you another notice by the 36th day after the second missed payment. This same process applies for every month you’re behind.

90 days late

At 90 days late, your servicer may send you a letter telling you to bring your mortgage current within 30 days, or face foreclosure. You’ll likely be charged a third late fee.

120 days late

The foreclosure process typically begins after the 120th day you’re behind. If you live in a state with judicial foreclosures, your loan servicer’s attorney will file a foreclosure lawsuit with your county court to resell the home and recoup the money you owe. The process may speed up in nonjudicial foreclosure states, because your lender doesn’t have to sue to repossess your home.

You’re notified in writing about the sale and given a move-out deadline. There’s still a chance you can keep your home if you pay the amount owed, along with any applicable legal fees, before the foreclosure sale date.

Can you get late mortgage payment forgiveness?

If you’ve otherwise had a good payment history but now have one missed mortgage payment, you could try writing a goodwill adjustment letter to request that your servicer erase the late payment information from your credit reports.

Your letter should include:

  • Your name
  • Your account number
  • Your contact information
  • A callout of your good payment history prior to missing a payment
  • An explanation of what led to the late mortgage payment
  • The steps you’re taking to prevent late payments in the future

End the letter by requesting that your servicer remove the late payment from your credit reports, and thank your servicer for their consideration. Print, sign and mail your letter to your servicer’s address.

The letter is simply a request; your servicer isn’t required to grant late mortgage payment forgiveness. If your servicer agrees to remove the late payment info from your credit reports, your credit scores may eventually increase — so long as you continue to make on-time payments.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

By clicking “See Rates”, you will be directed to LendingTree. Based on your creditworthiness, you may be matched with up to five different lenders in our partner network.

Advertiser Disclosure

Mortgage

What Is the Minimum Credit Score for a Home Loan?

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

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If you’re hoping to become a homeowner, your credit score may hold the keys to realizing that dream. Knowing the minimum credit score needed for a home loan gives you a baseline to help decide if it’s time to apply for a mortgage, or take some steps to boost your credit first.

It’s possible to get a mortgage with a score as low as 500 if you can come up with a 10% down payment. Keep reading to learn the minimum credit score requirements for the most common loan programs.

What are the minimum credit scores for home loans?

Your credit score plays a big role in determining whether you qualify for a mortgage and what your interest rate offers will be. A higher credit score means you’ll likely get a lower rate and a lower monthly mortgage payment.

There are four main types of mortgages: conventional loans, and government-backed loans insured by the Federal Housing Administration (FHA), the U.S. Department of Veterans Affairs (VA) and the U.S. Department of Agriculture (USDA). Conventional loans, which are the most common loan type with guidelines set by Fannie Mae and Freddie Mac, have a credit score minimum of 620. Although some loan programs don’t specify a minimum credit score needed to qualify, the approved lenders who offer them may set their own minimum requirements.

The table below features the minimum credit scores for these home loans, along with minimum down payment amounts and for whom each of the loans is best.

Loan type

Minimum credit score

Minimum down payment

Who it’s best for

Conventional6203%Borrowers with good credit
FHA500-579 with 10% down payment
580 with 3.5% down payment
10% with a score of 500-579
3.5% with a minimum score of 580
Borrowers who have bad credit and are purchasing a home at or below their area FHA loan limits
VANo credit minimum, but 620 recommendedNo down payment requiredActive-duty service members, veterans and eligible spouses with VA entitlement
USDA640No down payment requiredBorrowers in USDA-eligible rural areas with low- to moderate-incomes

What is a good credit score to buy a house?

Meeting the minimum score requirement for a home loan will limit your mortgage options, while higher credit scores will open the doors to more attractive rates and loan terms. A good credit score can also provide you with more choices for home loan financing.

  • 740 credit score. You’ll typically get your best interest rates for a conventional mortgage with a 740 (or higher) credit score. If you make less than a 20% down payment, you’ll pay for private mortgage insurance (PMI). PMI protects the lender in case you default on your home loan.
  • 640 credit score. Rural homebuyers need to pay attention to this benchmark for USDA financing. Exceptions may be possible with proof that the new payment is lower than what you’re paying for rent now.
  • 620 credit score. The bare minimum credit score for conventional financing comes with the largest mark-ups for interest rates and PMI.
  • 580 credit score. This is the bottom line to be considered for an FHA loan with a 3.5% down payment.
  • 500 credit score. This is the lowest credit score you can have to qualify for an FHA loan, but you must put 10% down to qualify.

Annual percentage rates by credit score

Your mortgage rate is a reflection of the risk lenders take when they offer you a loan. Lenders provide lower rates to borrowers who are the most likely to repay a mortgage.

Here’s a glimpse of the annual percentage rates (APRs) and monthly payments lenders may offer to borrowers at different credit score tiers on a $300,000, 30-year fixed loan. APR measures the total cost of borrowing, including the loan’s interest rate and fees.

FICO Score

APR

Monthly Payment

760-8503.011%$1,267
700-7593.233%$1,303
680-6993.410%$1,332
660-6793.624%$1,368
640-6594.054%$1,442
620-6394.6%$1,538
*Based on national average rate data from myFICO.com for a $300,000, 30-year, fixed-rate loan as of May 4, 2020.

As the credit score ranges fall, the interest rates are higher. Borrowers with a score of 760 to 850, the highest range, saw an average monthly payment of $1,267. Borrowers in the lowest credit score tier of 620 to 639 saw their monthly payment jump to $1,538. The extra $271 in monthly payments adds up to an additional $97,560 in interest charges over the life of the loan.

Steps for improving your credit score

Now that you have an idea of the extra cost of getting a minimum credit score mortgage, follow some of these tips that may help boost your score.

  • Make payments on time. It may seem obvious, but recent late payments on credit accounts hit your scores the hardest. Set your bills on autopay if possible to avoid forgetting to pay one.
  • Pay off balances monthly. Try to pay your entire balance off each month to show you can manage debt responsibly.
  • Keep your credit card balances low. If you do carry a credit card balance, charge 30% or less of the available credit limit on each account.
  • Have a mix of different credit types. Mortgage lenders want to see you can handle longer-term debt as well as credit cards. A car loan or personal loan will help demonstrate your ability to budget for installment debt payments over time.
  • Avoid applying for new accounts. A credit inquiry tells your lender you applied for credit. Even if you were applying to get your best deal on a credit card or car loan, multiple inquiries could drop your scores, and give a lender the impression you’re racking up debt.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.